Saturday, May 30, 2009

Ownership Culture

This is the second part of my commentary on a thread of discussion on OrangePolitics about the decision by the Board of WSM to replace consumer-owner point-of-sale discounts with an end-of-year dividend (in years of profit):

First, welcome back WeaverGuy! Now that I know who you are...

David [Beck], thank you for your comments. Of course, you can shop where you like [makes mental note: come the revolution, David's on dishwashing detail...]

Mind you, David, "If WSM had not listened to members..." Ouch! Where's the primacy of owner authority in that statement...?

But your point about the size of the Board underlines what this whole maneuver should really be about - namely, changing the nature of the relationship between the co-op and its owners, so as to encourage loyalty (on both sides).

This is a concept that's been doing the rounds of the national co-op movement for a few years now. It's known either as "Economic Linkage" or "Ownership Culture."

The idea is that, since the rest of the world is beginning to catch up with what used to be a co-op preserve (locally-grown, organic food), co-ops need to find a way to develop owner loyalty.

The premise is simple. Take all those co-ops that introduced discounts in the Seventies and the Eighties (so that they could compete with the likes of Costco and Sam's Club), and replace the discounts with a dividend system, that makes reward dependent on the co-op's performance.

But there is a second important element to this concept - which, bless our eternal hearts, was notably missing from all our pronouncements this week.

Namely that, in return for telling our owners their return will now be dependent on our performance, owners will be given more say in judging and monitoring our performance.

But how? Well, the funny thing is that we don't have to look too far for the answers. Just a year ago, another Task Force met. It was called the Elections Task Force, and it was charged with finding ways to improve turn-out in WSM Board Elections.

I was one of its members. And we quickly took the view that the best way of getting more owners to vote was to give them good reason to believe that voting would make a difference.

So, we widened our remit to include looking at ways of making the governance of WSM more accessible to and more meaningful for its owners.

I have a personal interest in WSM governance, being a worker-owner. My pet governance change, arising out of the Task Force, would be to allow all workers (not just worker-owners) to vote for their two representatives on the Board.

Workers have sacrificed much this past year to keep WSM afloat. We have taken cuts in our wages. We have worked harder for less. We are the folks on the cutting edge of keeping you folks (the customers) happy.

For all these reasons, I think that all workers should have meaningful input into the big decisions that are changing the face of our co-op.

Frankly, I think that some of those decisions would have been quite different (and better) if our in-house experts had been fully involved in their making.

I also believe that no worker should have to pay ($500 for a worker-owner share) to vote for their representatives in a worker-consumer co-operative.

We came up with a number of other ideas to introduce more democracy into decision-making in WSM.

From term limits for Board members, and more of them, to the not-so-radical notion that the Board would be more representative of the views of its owners if all of its voting members were elected - at present, three out of seven are appointed.

In addition, some of us felt that accessibility would be enhanced if there were active consumer-owner and worker-owner discussion groups, and an online forum, not dissimilar to OrangePolitics.

In fact, one of your consumer-owners has already created the forum. It exists, just waiting for the Board to adopt it, and attach it to the WSM web-site.

The bottom line is this: what's done is done. The discounts are gone. Now, let's focus on letting the other shoe drop, and agitate as best we can to encourage our co-op's Board to introduce the other half of the concept of "Ownership Culture": mechanisms, systems and procedures that allow for more meaningful owner involvement.

I have already asked the Board (more than once) to set up a new Task Force, to make recommendations for changes to WSM Governance.

Fill in those little slips of paper in the stores asking for the same thing, why not? Or write to the Board. Or turn up at the next Annual Meeting.

Better still, make it a condition of voting for a candidate in this year's Board Elections. Don't leave it to the person standing next to you in line. Why don't you be the one to take the initiative on this?

Oh, a P.S. To Mark [Chilton]. I agree with you about the Hillsborough store. And forecasting the economy.

The thing is, the world has now changed. That is why, at the last Annual Meeting, I proposed a motion that an Owners' Committee be established to review the entire financial picture at WSM, and to make recommendations on the sustainability of our now some $11m in debt.

The motion was passed. The Board then, in its infinite wisdom, took the view that it knew best, and decided not to create the Committee.

Funny thing. Do you know how many votes were cast for the winning consumer-owner candidate in the 2008 Board Elections? About 70.

People. It really doesn't take much to change the way WSM functions - if you really want it...

Anyway, back to Mark's two points. I wonder if the time has not come now to take the view that we will best save that which we have created (a Hillsborough store and a central food processing facility in Orange County) by inviting the residents of Hillsborough to take over the financing of their own store, and to set the Food House free, to become a stand alone unit, able also to attract investment from sources other than just WSM owners in Chapel Hill and Carrboro?